More Insights Into Steven Emerson’s Tangled Funding Web

The Tennessean‘s revelation that Steven Emerson’s non-profit Investigative Project on Terrorism was used to funnel money to a for-profit production company where Emerson is the only employee turns out to be just the tip of the iceberg. A closer look at contributions directed to the Investigative Project sheds light on a wider network of non-profit and for-profit organizations with ties to Emerson and his tangled web of associated groups.

Emerson, a self-styled expert on terrorism, came under fire after the Tennessean newspaper ran a lengthy investigative piece exploring the relationship between the Investigative Project, where Emerson is the executive director, and SAE Productions. In 2008, SAE took a $3.4 million dollar payment from the Investigative Project, a tax-exempt non-profit.

An investigation of donor tax records from 2001 to 2007 reveals an even more intricate web of organizations. The records show more than $1.6 million in contributions to the “Investigative Project,” “Investigative Project on Terrorism,” and “IPT” in care of a largely unknown group called the Counterterrorism & Security Education and Research Foundation (CTSERF).

Much like the Investigative Project, CTSERF tax forms list the transfer of all grant revenues to a for profit entity, the International Association of Counterterrorism and Security Professionals (IACSP), in the form of “grants for research on issues of terrorism and counter-terrorism.” It is difficult to determine how the money is disbursed or used after it is transferred, since the IACSP, unlike the CTSERF, is a private for-profit entity.

While the grants are directed to The Investigative Project care-of the CTSERF, neither CTSERF, IACSP nor the Investigative Project’s websites make any mention of a relationship between the CTSERF and the Investigative Project.

“This is a convenient arrangement for avoiding disclosure and allowing tax deductions,” Daniel Borochoff, president of the watchdog group American Institute of Philanthropy, told me.

“[The tax deductible donations] are publicly subsidized money that the non profit is receiving. There has to be accountability on what was accomplished with this publicly subsidized money,” Borochoff continued.

When contacted for comment about the relationship between the IACSP/CTSERF and the Investigative Project, Ray Locker, the Investigative Project’s managing director, would only say that a relationship “exists.” He added: “It’s all above board and passes muster with the IRS.”

In a follow-up email exchange, Locker said, “We don’t discuss our sources of funding because of the nature of the work we do. Our founder, Steven Emerson, has received death threats in the past, and we are trying to protect his security and that of the organization.”

Despite the lack of detail, Locker was upfront about the relationship. However, Emerson would not confirm a connection between the groups when I queried him in 2008 about the listing of IACSP’s web address at the bottom of a 2007 Investigative Project press release.

Emerson e-mailed that he had “no idea how the IACSP website address got listed on the Lexis-Nexis version of our press release. We are not a project of IACSP although we have frequently published material in their magazine” – the Journal of Counterterrorism & Homeland Security International, a quarterly journal published by the association.

“As for funding questions, other than what we have stated on our website, that we take no funds from outside the U.S. or from governmental agencies or from religious and political groups, we have a long standing policy since we were founded not to discuss matters of funding (for security reasons),” wrote Emerson.

The IACSP describes itself as “a center of information and educational services for those concerned about the challenges now facing all free societies, and promoting professional ethics in the counterterrorism field.” CTSERF’s stated mission is to “develop education programs and materials for security professional and the general publics that will enhance our understanding of the causes of terrorism and the measures necessary to deter and combat it.”

Both organizations are headed by Steven J. Fustero, who serves as the chief executive of the CTSERF and the President of the IACSP. When contacted for comment about the grants directed to the Investigative Project by the CTSERF and the transfer of all grant revenue to his for-profit entity, the IACSP, Fustero responded, “I originally founded IACSP in 1986 so I’ve been in the counter-terrorism industry for almost 25 years. During this entire period I’ve never publicly discussed how people or various think tanks in the industry, including IACSP, conducts their affairs, aside from what the IRS obligates me to disclose – for example in the 990s, where I’m sure you see that we disclose that CTSERF ‘was established by the officers the International Association for Counterterrorism and Security Professionals (IACSP). The research and education designated funds are therefore transferred to IACSP, which in turn makes the research grants.’”

An examination of CTSERF tax documents from 1999 to 2008 show the group receiving $11,108,332 in grant revenue and transferring $12,206,900 to the IACSP.

Other high profile donors to the CTSERF include casino magnate Sheldon Adelson, whose foundation contributed $250,000 in 2006, and billionaire Obama supporter Lester Crown, whose foundation wrote grants totaling $75,000 between 2006 and 2007. Neither Adelson nor Crown specified the Investigative Project as the end recipient of their funding.

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